Journal of Civil Law Studies
Volume 9
Number 2 Conference Papers
The Louisiana Civil Code Translation Project:
Enhancing Visibility and Promoting the Civil Law in
English
Baton Rouge, April 10 and 11, 2014
Part 2. Worldwide Perspectives
Article 9
3-29-2017
China: Fragmented Rights and Tragedy of
Anticommons: Evidence from China’s Coastal
Waters
Bing Shui
Follow this and additional works at: http://digitalcommons.law.lsu.edu/jcls
Part of the Civil Law Commons
Repository Citation
Bing Shui, China: Fragmented Rights and Tragedy of Anticommons: Evidence from China’s Coastal Waters, 9 J. Civ. L. Stud. (2017)
Available at: http://digitalcommons.law.lsu.edu/jcls/vol9/iss2/9
This Civil Law in the World is brought to you for free and open access by the Law Reviews and Journals at DigitalCommons @ LSU Law Center. It has
been accepted for inclusion in Journal of Civil Law Studies by an authorized editor of DigitalCommons @ LSU Law Center. For more information,
please contact kayla.reed@law.lsu.edu.
FRAGMENTED RIGHTS AND TRAGEDY OF
ANTICOMMONS: EVIDENCE FROM CHINA’S COASTAL
WATERS
Bing Shui ∗
I. Introduction ............................................................................. 502
II. The Evolution of Property Rights: Spectrum or Rubik’s Cube?
..................................................................................................... 507
III. The Transition of Coastal Waters in China........................... 513
A. Characteristics of Coastal Waters ...................................... 513
B. Historical Background to the Transition ............................ 515
C. The Three Stages of the Transition .................................... 516
IV. The Empirical Reality of Coastal Waters in China .............. 520
A. Does the Property Regime Lead to Anticommons? ........... 520
1. The Bottom-Up Model Versus the Top-Down Model .... 520
2. Data and Findings ........................................................... 524
B. Why a Gridlock Will Not Occur ........................................ 528
V. Conclusion ............................................................................. 531
VI. Appendix............................................................................... 532
∗ PhD in Law, Associate Professor at Faculty of Law, University of Macau.
Email: bingshui@umac.mo. Prior drafts of this article circulated at the 2015 Chicago Law School Summer Institute in Law and Economics colloquium. For helpful comments, warm thanks to Professor Richard Epstein, Lior Strahilevitz, and
Lee Anne Fennell.
502
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
ABSTRACT
The ownership of, and rights to, coastal waters are exhibited on
a cumulative scale ranging from commons-like to private use. As an
example of a natural resource with complex and interlinked ecosystems, coastal waters give rise to many kinds of legal norms and policy instruments. As shown by my investigation of China’s coastal
waters, people are willing to pay for legal rights which guarantee
exclusive access, regardless of the relatively high cost. The statistical data further reveals that, when coastal waters are divided, there
is a negative correlation between fragmentation of the seas and seabased production. Therefore, based on the empirical evidence, I am
reasonably confident that the tragedy of the anticommons is not occurring in China’s coastal waters.
Keywords: natural resources, coastal waters, property law, Chinese
law, comparative law
I. INTRODUCTION
Two metaphors are often used to describe the polar opposites of
the allocation of natural resources: “the tragedy of the commons”
and “the tragedy of the anticommons.” The tragedy of the commons
describes the destruction that occurs when natural resources are accessible to all members in a given community. 1 Depleted fisheries
and overgrazed fields are typical examples of this tragedy. 2 However, according to Michael Heller’s oft-cited article, a resource is
prone to underuse when too many owners hold exclusive rights. 3
1. In Hardin’s words, “Freedom in a commons brings ruin to all.” Garrett
Hardin, The Tragedy of the Commons, 162 AM. ASSOC. ADV. SCIENCE PUB. 1243–
44 (1968). Study on the broad range of commons includes adaptive systems, efficiency, environmental policy, equity, experimental economics, free riding, game
theory, gender, institutional design principles, new institutional economics, participatory management systems, property rights regimes, resilience, regulation,
sustainability, etc. See the Digital Library of the Commons (DLC),
https://perma.cc/2WTL-QQYV.
2. Colin W. Clark, Profit Maximization and the Extinction of Animal Species, 81 J. POLIT. ECON. 950, 950–61 (1973).
3. Michael A. Heller, The Tragedy of the Anticommons: Property in the
Transition from Marx to Markets, 111 HARV. L. REV. 621, 621–25 (1998); By
2016]
CHINA
503
The more we divide common resources into small, fenced-off lots,
Heller argues, the more difficult we make it for people to do business and build something. 4 It is for this reason that too much ownership “wrecks markets, stops innovation, costs lives” and finally
leads to “the tragedy of the anticommons” or a gridlocked economy. 5
In some ways, the anticommons are a mirror image of the commons. Property theorists attest to extreme cases of the inefficient use
of natural resources, claiming that the commons leads to overuse
and destruction whereas the anticommons leads to underuse and
waste. Nowadays, the term “anticommons” has become so widely
used that it flows “easily from the lips and pens of nearly every property teacher and scholar.” 6 The broad range of anticommons encompasses empty Moscow storefronts, 7 suboptimal land use, 8 undesirable cyberspace, 9 weakening biotechnology innovation, 10 and underdeveloped oyster farming. 11 However, aside from the controversial
usage of this new term in the literature, there is insufficient empirical
evidence to either confirm or refute the metaphor. 12 So, if a commons-like resource is divided into small fragments in accordance
mathematical means, Nobel Laureate James Buchanan proved the first economic
model of the anticommons in 2000. James M. Buchanan & Yong J. Yoon, Symmetric Tragedies: Commons and Anticommons, 43 J. L. & ECON. 1, 1–13 (2000).
4. James Surowiecki, The Permission Problem, THE NEW YORKER, Aug.
11, 2008.
5. MICHAEL A. HELLER, THE GRIDLOCK ECONOMY: HOW TOO MUCH
OWNERSHIP WRECKS MARKETS, STOPS INNOVATION, AND COSTS LIVES 2 (Basic
Books 2008).
6. Lee Anne Fennell, Common Interest Tragedies, 98 NW. U. L. REV. 907,
908 (2004).
7. Heller, supra note 3.
8. Francesco Parisi, Norbert Schulz & Ben Depoorter, Duality in Property:
Commons and Anticommons, 25 INT’L REV. L. & ECON. 578, 578–91 (2005).
9. Dan Hunter, Cyberspace as Place and the Tragedy of the Digital Anticommons, 91 CAL. L. REV. 439, 439–519 (2003).
10. Michael S. Mireles Jr., An Examination of Patents, Licensing, Research
Tools, and the Tragedy of the Anticommons in Biotechnology Innovation, 38 U.
MICH. J. L. REFORM 141, 144 (2004).
11. Michael A. Heller, The Rose Theorem?, 18 YALE J. L. & HUMAN. 29, 43
(2006).
12. For example, the influence of the anticommons is highly disputed with
respect to intellectual property, while Epstein and Kuhlik pointed out that claims
504
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
with Heller’s assumption, will it lead to coordination breakdown? If
yes, it may prove that Heller’s hypothesis is true in practice; if not,
one can question whether this assertion is valid in all situations.
This article aims to explore the empirical realities of Chinese
coastal waters and to determine whether fragmented property rights
will lead to a tragedy of the anticommons. This examination is based
on two separate but related grounds. First, the property regime of the
coastal waters exhibits a cumulative scale ranging from commonslike to private use. As an example of a natural resource with complex and interlinked ecosystems, 13 coastal waters accommodate
many kinds of legal norms and policy instruments. Indeed, it would
be no exaggeration to say that coastal waters are among the most
challenging forms of natural resource from the perspective of property law.
Second, the evolution of coastal waters in China sheds light on
the common-to-private spectrum. In the view of neoclassical economics, the transition of the Chinese economy since 1978 has been
interpreted as a development of a “resources allocation mechanism.” 14 To put a new spin on this long-lasting issue, the legal mechanisms behind Chinese coastal waters can offer some instructive illustrations of the evolution of property rights. At first glance, coastal
waters should be regarded as a common resource in the context of
Chinese law. According to Article 9 of the Constitution of the People’s Republic of China, coastal waters and other natural resources
of biomedical anticommons were unsupported by empirical data. See Michael A.
Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons
in Biomedical Research, 280 SCIENCE 698, 698–701 (1998); Richard A. Epstein
& Bruce N. Kuhlik, Is There a Biomedical Anticommons?, 27 REGULATION 54,
54–58 (2004).
13. DON HINRICHSEN, COASTAL WATERS OF THE WORLD: TRENDS, THREATS
AND STRATEGIES 2 (Island Press 1998).
14. Shigeru Ishicawa, Underdevelopment of the Market Economy and the
Limit of the Economic Liberation, in JAPANESE VIEWS ON ECONOMIC
DEVELOPMENT: DIVERSE PATHS TO THE MARKET 87 (Kenichi Ohno & Izumi
Ohno eds., Routledge 1998).
2016]
CHINA
505
belong to “the whole people.” 15 However, with the development of
fisheries, the invisible hand of the marketplace pushes coastal waters
into the realms of private use. As a case in point, many fishermen
fenced off small sections of the waters to produce seafood and as a
consequence were able to benefit from the de facto occupation of
the area. To resolve this situation without having to confer legal title,
the Property Law of 2007 granted the fishermen in question the exclusive rights to use the coastal waters while the state retains monopoly ownership. 16 Consequently, the legal status of coastal areas
has been transformed from a commons-like resource into a mixture
of state and private property. Within the legal context of the coastal
waters in China, the main actors include the state owner, individual
users, and local regulators. There are striking similarities in this
form of legal structure between Moscow storefronts and Chinese
seawaters. The question then arises as to whether this type of regime
will lead to underuse.
In order to arrive at an answer that can be supported by evidence,
I have spent many years investigating how the coastal water property regime has evolved in China. Initially, I distinguished between
two methods of fishery production, namely aquaculture and capture,
with the difference between them being essentially the degree of exclusive use. A central requirement of aquaculture is the persistent
occupation of specific waters. To undertake aquaculture, a “well15. China’s reformers, unlike those in some Eastern Bloc countries, have
been able to develop more varied and inventive mechanisms. Chinese civil law
drafters: “seemed to be moving away from the Soviet concept of ‘state ownership,’ i.e. that ‘the state is the sole owner of state property,’ towards the more
flexible notion of ‘state property’ which ‘belongs to the whole people.’” Edward
J. Epstein, The Theoretical System of Property Rights in China’s General Principles of Civil Law: Theoretical Controversy in the Drafting Process and Beyond,
52 LAW & CONTEMP. PROBS. 177, 186 (1989).
16. According to Art. 122 of Wu quan fa [Property Law] (promulgated by
the Standing Comm. Nat’l People’s Cong., Mar. 16, 2007, effective Oct. 1, 2007)
2007 Standing Comm. Nat’l People’s Cong. Gaz. (P.R.C.), “the right to the use
of sea area that is obtained in accordance with law shall be protected by law.”
Since China’s General Principles of Civil Law in 1986, five kinds of property
rights have been granted to individuals, but the right to use coastal waters was not
listed as a property right until the Property Law of 2007.
506
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
defined, enforceable, transferable, and durable” property right is
necessary, 17 and thus a rights-based regime needs to be created to
facilitate the continuity of occupation and use of given waters. At
the same time, capture is normally regulated by simple administrative tools such as permits and licensing. My fieldwork findings confirm this. As shown in the interview and questionnaire data, people
are willing to pay for a legal title, which clearly indicates their expectation of exclusive access. Furthermore, by collecting data in all
eleven coastal provinces, I found that aquaculture productivity in
China is far higher than that of capture, a completely different situation compared to other parts of the world. Law and economics literature offers an explanatory account of the imbalance in growth
between aquaculture and capture production. The property regime
of aquaculture is an efficiency-increasing institution because it internalizes potential externalities in commons-like fields. This is consistent with Harold Demsetz’s classic doctrine—the emergence of
property rights is said to overcome the tragedy of the commons. 18
Demsetz’s doctrine did not indicate whether a property regime
would, or the extent to which it would, bring about the opposite effect: where too many rights-holders could block the efficient use of
a single resource. Fortunately, the empirical reality, established
from the data collected in China’s coastal waters, has provided a
striking base from which to explore this potential problem. On
closer examination, I found that the fragmentation of coastal-water
holdings has not led to underuse. In order to illustrate this point accurately, I delved deeper into the data on coastal waters which were
occupied by rights-holders within China’s eleven coastal provinces.
The statistical data revealed a correlation between the fragmentation
index and the production index. It highlighted that the smaller the
17. Donald Leal, Prologue to EVOLVING PROPERTY RIGHTS IN MARINE
FISHERIES ix (Donald Leal ed., Rowman & Littlefield 2005) [hereinafter
PROPERTY RIGHTS IN MARINE FISHERIES].
18. Harold Demsetz, Toward a Theory of Property Rights, 57 AM. ECON.
REV. 347, 349 (1967).
2016]
CHINA
507
area designated for farming, the greater the level of production output. In other words, the fragmentation of coastal waters does not
lead to underuse or a breakdown in fish production. To summarize,
based on the empirical evidence, I am reasonably confident that the
tragedy of the anticommons is not occurring in China’s coastal waters.
The article proceeds as follows. Part II provides an overview of
the common-to-private spectrum in natural resources. From a theoretical standpoint, I argue that Heller’s dynamic analytics puts forward an incomplete explanation of the evolution of property rights.
Part III introduces the historical background to the transition from
commons-like resources into private property. China’s wait-and-see
process indicates that the change of utility would lead to a demand
for exclusive-use rights. Part IV empirically explores two sequential
questions. First, will the fragmented waters lead to a tragedy of the
anticommons in accordance with Heller’s hypothesis? And second,
if not, why will this not occur? The answer lies in the fact that state
owners and individual rights-holders can interact and coordinate
with each other, and the market-driven system can prevent any gridlock. Part V will close with a brief conclusion.
II. THE EVOLUTION OF PROPERTY RIGHTS: SPECTRUM OR RUBIK’S
CUBE?
From the perspective of property law, debates on natural resources “can move beyond polarizing oppositions that have made
jurisprudential debates unsolvable and rendered concrete problems
invisible” by dynamic analytics. 19 To date, much has been written
about the evolution of property rights over natural resources, even
19. Michael A. Heller, The Dynamic Analytics of Property Law, 2
THEORETICAL INQ. L. 79, 79 (2001). Actually, contrary to the Blackstonian tradition in common law, which regards natural resources law as a subset of property
law, issues relating to the use and control of natural resources are often treated as
administrative law problems rather than as property law problems in many jurisdictions. See Robert L. Fishman, What is Natural Resources Law?, 78 U. COLO.
L. REV. 717 (2007).
508
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
though it is often unclear what is expected to evolve. 20 Following
Harold Demsetz’s classic hypothesis, which is still widely cited, the
emergence of property rights is said to internalize potential externalities and thus the “tragedy of the commons” under the open-access
regime could be eliminated. 21 Therefore, the term the “tragedy of
the commons” has gradually become one of the starting points for
questioning the emergence of property rights over natural resources.
Conversely, in what Heller has termed the “tragedy of the anticommons,” the inefficient use of a specified piece of property will arise
when “multiple owners are each endowed with the right to exclude
others from a scarce source, and no one has an effective privilege of
use. When too many owners hold such rights of exclusion, the resources are prone to underuse . . .” 22
The symmetrical tragedies of the commons and anticommons
have set a framework for a wide range of social, economic, and legal
issues. Along these lines, the current broad classification of categories of property in natural resources needs to be modified. The standard property trilogy of private, commons, and state seems outdated.
In light of Heller’s dynamic analytics, the evolution of property
could be delineated as a common-to-private spectrum 23:
20. Henry E. Smith, Exclusion Versus Governance: Two Strategies for Delineating Property Rights, 31 J. LEGAL STUD. 453 (2002). There are, however,
few theoretical works on the evolution of rights to natural resources by legal academics, while economists are much more interested in this area.
21. Demsetz, supra note 18.
22. Heller, supra note 3, at 622.
23. Michael A. Heller, Boundaries of Private Property, 108 YALE. L. J.
1163, 1167 (1999); see generally Heller, supra note 19.
2016]
CHINA
509
Figure 1. The Spectrum of Property Regime in Heller’s Dynamic
Analytics
As Benjamin Cardozo wrote, “[m]etaphors in law are to be narrowly watched, for starting as devices to liberate thought, they end
often by enslaving it.” 24 No matter how popular the use of the anticommons metaphor may appear to be, it is evident that it is poorly
suited to the task of explaining the property regime in the real world.
Indeed, the evolution of the resource system cannot be portrayed as
a one-dimensional spectrum moving from one extreme to the other.
First, there is insufficient empirical evidence to confirm Heller’s
dynamic analytics in the field of natural resources. Across a broad
range of contemporary scholarship on the subject of property, two
approaches dominate the discussions: utilitarian theory and liberal
contractarian theory. 25 Building on the work of Ronald Coase, Demsetz argues that the legal rule of resources follows the path that produces net benefits for the relevant community. 26 Yet some utilitarian
theorists, such as Heller, are so concentrated on the “cost–benefit
equation” that they usually, or often, ignore other factors that will
generate the evolution of property rights over natural resources.
More broadly, we might observe that custom and culture have
played an under-analyzed but vital role in the allocation of natural
resources. For instance, historical examples in areas such as mining
24. Berkey v. Third Ave. Ry. Co., 24 N.Y. 84, 94, 155 N.E. 58, 61 (1926).
25. PROPERTY AND COMMUNITY xviii (Gregory S. Alexander & Eduardo M.
Peñalver eds., Oxford University Press 2010).
26. Harold Demsetz, Toward a Theory of Property RightsⅡ: The Competition Between Private and Collective Ownership, 31 J. LEGAL STUD. 653 (2002).
510
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
and whaling rules serve to illustrate that property law sometimes relies on community custom. 27 Similarly, traditional custom still holds
the de facto influence when allocating natural resources in China’s
remote countryside. 28 Increasingly, empirical experience shows that
historical tradition, cultural differences, distributional preference,
and other factors combine to have an effect on the evolution of property rights over natural resources. 29 By regarding such a challenging
subject as being “commons without tragedy” 30 or the “comedy of
the commons,” 31 we must recognize that the theory underlying commons and anticommons often fails to square with reality.
Second, Heller’s dynamic analytics puts forward an incomplete
explanation for the evolution of property rights. According to Heller’s argument, there is the existence of a theoretical precondition
that high transaction costs or potential hold-out problems will lead
to “market failure” due to the lack of outsider authority. Conversely,
Richard Epstein holds that government ownership and regulation often create far more gridlock than private property, and therefore he
believes that there is not too much private property but, rather, too
little. 32 Personally, I take both of these two opposing views with a
27. Henry E. Smith, Community and Custom in Property, 10 THEORETICAL
INQUIRIES L. 5, 24–34 (2002).
28. For instance, Mongolians still rely on some ancient rules to allocate and
use natural resources such as the habit of “rotation grazing.” See Bing Mei et al.,
Gu Dai Meng Gu Zu Zi Ran Zi Yuan Bao Hu Fa Lv Ji Qi Shi [The Enlightenment
of Natural Resources Protection Law of the Ancient Mongols to Protect the Environment Nowadays], 36 LAN ZHOU DA XUE XUE BAO (J. LANZHOU U.) 100, 100–
04 (2008) (Ch.).
29. As Gregory Alexander writes, “culture is all but missing from de Soto’s
explanation for the rise of capitalism in the developed world.” Gregory S. Alexander, Culture and Capitalism: A Comment on de Soto, in HERNANDO DE SOTO
AND PROPERTY IN A MARKET ECONOMY 41 (D. Benjamin Barros ed., Ashgate
2010).
30. Lee Anne Fennell, Commons, Anticommons, Semicommons, in
RESEARCH HANDBOOK ON THE ECONOMICS OF PROPERTY LAW 35 (Kenneth
Ayotte & Henry E. Smith eds., Edward Elgar 2011).
31. Carol Rose proposed the term “comedy of the commons” to illustrate
that enforcing private-property rights was costly. See Carol Rose, The Comedy of
the Commons: Custom, Commerce, and Inherently Public Property, 53 U. CHI. L.
REV. 711, 711–81 (1986).
32. Richard A. Epstein, Heller’s Gridlock Economy in Perspective: Why
There is Too Little, Not Too Much Private Property, 53 ARIZ. L. REV. 82 (2011).
2016]
CHINA
511
grain of salt. In a world without the friction caused by transaction
costs, 33 either private use or common use leads to efficiency. However, in a less than ideal world where a particular resource is used
by multiple actors, the optimum regime established under the restriction of transactional barriers will vary from location to location.
Therefore, the efficiency of property rights arrangements is situation-specific and Heller’s hypothesis does not explain the whole
story of resource regimes. To give one example, in Papua New
Guinea, many land areas have been returned to communal ownership because the concept of private land ownership has not been well
integrated into the local culture. 34 In contrast to the dogmatic dichotomy of commons and private property, these two seemingly contradictory models are always integrated and coordinated as a solution
to high transaction costs in the real world. 35 Therefore, neither common nor private property provides a one-size-fits-all solution to the
allocation of natural resources.
Third, given the conceptual gap between the common-law and
civil-law systems, I am skeptical about whether Heller’s hypothesis
leaves enough room to interpret the property law of other jurisdictions. The implication of property rights in common law is different
to that held within civil law. As any first-year law student knows,
the common law has savaged the idea of “absolute” ownership and
33. It is worth pointing out that Fennell broadened the meaning of transaction costs. She proposed the term “resource access costs” to designate the full
range of costs. See Lee Anne Fennell, The Problem of Resource Access, 126
HARV. L. REV. 1472, 1477 (2013).
34. THOMAS STERNER & JESSICA CORIA, POLICY INSTRUMENTS FOR
ENVIRONMENTAL AND NATURAL RESOURCE MANAGEMENT 47 (2d ed., RFF Press
2011).
35. Using a recent example, the failure of many traditional regulation structures has led economists to propose several property rights-based approaches, including Individual Fishing Quotas (IFQs or ITQs), which allocate units of harvest,
and Territorial User Rights Fisheries (TURFs), which allocate units of space to
private firms, cooperatives, or fishermen. Christopher Costello & Daniel T. Kaffine, Marine Protected Areas in Spatial Property-Rights Fisheries, 54 AUSTL. J.
AGRIC. RES. ECON. 321, 321–41 (2010).
512
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
tended to view property as a “bundle of rights.” 36 In contrast, as can
be traced back to the concept of dominium in Roman law, civil law
jurisdictions still hold the timeless and “absolute” notion of ownership and there is no such thing as “relative” ownership. 37 For example, by subdividing property rights into right in rem and in personam, leases were originally viewed as only creating a contractual
relationship in civil law. Underlying the principle is a denial of the
unity of ownership. However, English law created the concept of
tenure and thus ownership could apparently be divided between
landlord and tenant. 38 As a result, with no “absolute ownership
right,” the “bundle of rights” in common law can strengthen flexibility in the use of natural resources, although it is likely to increase
the possibility of the disintegration of property, as the greater number of rights of exclusion that exist, the more likely it is that anticommons will occur (or vice versa). So far, little evidence has been
offered to support the argument that the fragmentation of property
rights would lead to the underuse of natural resources in civil law
jurisdictions.
To summarize, despite its growing influence, Heller’s insight
leaves more questions open than it answers. Unlike the flow of oneway traffic, where all resources routinely move from open-access to
exclusive-access, a property regime of natural resources is always
(or perhaps typically) a mixture of many seemingly contradictory
mechanisms. Therefore, taking into account the diversified resources system in the real world, I prefer to regard the evolution of
36. Abraham Bell & Gideon Parchomovsky, Reconfiguring Property in
Three Dimensions, 75 U. CHI. L. REV. 1015 (2008); see also James E. Penner, The
Bundle of Rights Picture of Property, 43 UCLA L. REV. 711 (1996).
37. After the new Dutch Civil Code of 1992, civil law jurisdictions are
slowly moving toward to the notion of “relative” ownership. See Willem J.
Zwalve, Temporary and Conditional Ownership: Some Observations on Modern
Dutch Property Law, in PROPERTY LAW ON THE THRESHOLD OF THE 21ST
CENTURY 333-45 (Gerrit van Maanen & André van der Walt eds., Maklu
Utitgevers 1996).
38. Kevin Gray, Property in Common Law Systems, in PROPERTY LAW ON
THE THRESHOLD OF THE 21ST CENTURY, supra note 37 at 236–245; see also JESSE
DUKEMINIER ET AL., PROPERTY 421-28 (7th ed., Aspen Publishers 2010).
2016]
CHINA
513
property rights as being a Rubik’s Cube rather than a one-dimensional spectrum.
III. THE TRANSITION OF COASTAL WATERS IN CHINA
A. Characteristics of Coastal Waters
The oceans were the last commons. 39 According to the tradition
of ancient Rome, immovable property was confined to land and its
attachment thereto. Historically, the sea has been excluded from the
list of property and treated as the commons because of three characteristics:
Abundance—Viewed from the perspective of natural law, the
sea has usually been regarded as an inexhaustible treasure. In Roman law, the sea was res communis, which suggests that it was common property and unsusceptible to private ownership. 40 If rights
were violated when using the sea area, a penalty would be imposed
as actio iniurarium. 41 In 1609, Hugo Grotius argued that the sea belonged to no one and therefore no state could claim sovereignty over
it. 42 This concept, with its strong philosophical and rhetorical roots,
was generally accepted. 43 Nevertheless, the debate was irrelevant
from the view of property law. As a form of natural resource without
scarcity, the sea (in the same way as sunshine or air) has neither
39. Rögnvaldur Hannesson, The Privatization of the Oceans, in PROPERTY
RIGHTS IN MARINE FISHERIES, supra note 17, at 25.
40. Samuel C. Wiel, Running Water, 22 HARV. L. REV. 190, 190–215
(1909). Generally speaking, if the seas were res communis, they were free to be
used by all; if the seas were res nullius, they were the property of no one. See
DOUGLAS M. JOHNSTON, THE INTERNATIONAL LAW OF FISHERIES: A
FRAMEWORK FOR POLICY-ORIENTED INQUIRIES (Martinus Nijhoff Publishers
1987).
41. Christin Gowar & C. J. Visser, Actio Iniuriarum–One Action, But Only
One Iniuria? Le Roux v. Dey 2011 3 SA 274 (CC), 76 JOURNAL OF
COMTEMPORARY ROMAN-DUTCH LAW 490, 490–98 (2013).
42. HUGO GROTIUS, THE FREEDOM OF THE SEAS (Ralph van Deman Magoffin trans., Oxford University Press 1916) (1609).
43. At the same time, an opposite view was taken by a particularly Scottish
school of thought, which accorded propriety interests in the coastal waters to the
coastal states. See RICHARD BARNES, PROPERTY RIGHTS AND NATURAL
RESOURCES 173 (Bloomsbury Publishing 2009).
514
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
economic utility nor legal value. For this reason, the sea area has not
been mentioned by legislators in either the French Civil Code or the
German Civil Code.
Fluidity—Because of its mobility and fluidity, an exclusion
strategy is difficult in the case of water. 44 In the civil law context,
only those physical things that can be possessed exclusively would
be classified as property (right in rem). Although property rights
may be exercised with respect to “any valuable object of any conceivable kind” 45 in common law, only “tangible, unique and easily
identifiable” 46 things can be treated as property. Due to its physically
fluid nature, it appears that the permanent physical occupation of
coastal waters would be “mission impossible.” In essence, it is difficult to define the ownership of waters in geographical terms, making it hard for legislators to place them on the list of movable or
immovable property.
Publicity—Under classical liberal theory, which divides the public and private spheres, property rights have been placed entirely
within the private sphere. 47 As a public trust resource, coastal waters
serve the public—they are recognized to that end, and property
rights are limited due to the nature of coastal waters as a public resource. 48 For example, if waters are navigable in the United States,
all state-created property rights and private interests in these waters
are subordinate to this overriding principle of navigation. 49 Therefore, providing an account of the public function of the seas is vital 50
44. Henry E. Smith, Governing Water: The Semicommons of Fluid Property
Rights, 50 ARIZ. L. REV. 445 (2008).
45. A. Irving Hallowell, Nature and Function of Property as a Social Institution, 1 J. LEGAL & POL. SOC. 115, 128 (1942).
46. Andrew Beckerman-Rodau, Are Ideas Within the Traditional Definition
of Property: A Jurisprudential Analysis, 47 ARK. L. REV. 603, 605 (1994).
47. BARNES, supra note 43, at 63.
48. State v. Shack 277 A 2d 369, 372 (N.J. 1971).
49. See Joseph J. Kalo, Introduction to ALISON RIESER, DONNA R. CHRISTIE,
JOSEPH J. KALO & RICHARD G. HILDRETH, COASTAL AND OCEAN LAW: CASES
AND MATERIALS 1–3 (Thomson West 2007).
50. Id. According to the United States Congress, “the federal government
had a direct responsibility for navigation and commerce in coastal waters and a
shared interest in conservation and economic developments in coastal areas.”
2016]
CHINA
515
and, as a result, coastal waters are not used in the same way as other
resources.
B. Historical Background to the Transition
Broadly speaking, there are two threads running through the
evolution of the resource regime in China: political power and private rights. For most of China’s long history, the conception of property has been different from the distinction drawn in Western law,
as in Roman law, between imperium and dominium, 51 or political
power and private rights. 52 With rare exceptions, property in natural
resources has been primarily viewed as a tool of political power in
Chinese history. Therefore, it has been a long-standing source of
controversy among modern scholars as to whether private law existed in the ancient period. 53
With the advent of Communist rule in 1949, ideological and institutional changes brought about profound amendments to codified
laws. At variance with the survival-oriented peasant in traditional
China and the capitalism of the West, China pursued a planned economy in accordance with Marxist–Leninist theory. According to Article 9 of the Constitution of the People’s Republic of China, “all
mineral resources, waters, forests, mountains, grassland, wasteland,
beaches and other natural resources are owned by the state, that is,
by the whole people, with the exception of the forests, mountains,
grasslands, wastelands and beaches that are owned by collectives in
51. Geoffrey Samuel, The Many Dimensions of Property, in PROPERTY AND
CONSTITUTION 40-45 (Janet Mclean ed., Hart Publishing 1999); See also
Morris R. Cohen, Property and Sovereignty, 13 CORNELL L. Q. 8, 13 (1927). As
M. R. Cohen noted, in contrast, “we must not overlook the actual fact that dominium over things is also imperium over our fellow human beings.”
52. A famous phrase in the Book of Songs (shi jing), the first collection of
poems in China, created in the 11th Century BC, states that “all the lands belong
to the emperor.” Translated from the ancient Chinese phrase “pu tian zhi xia, mo
fei wang tu.”
53. For a summary of these arguments, see Yu Jiang, guan yu Zhong guo gu
dai you wu min fa wen ti de zai si kao [Rethink Over the Question of Whether
There was Private Law in Ancient China or Not], 6 XIAN DAI FA XUE (J. MODERN
L. STUD.) 35, 35–45 (2001).
THE
516
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
accordance with the law.” Obviously, all natural resources, including coastal waters, are therefore officially labeled as state property.
However, in light of the economic reforms and opening-up policies
that have been introduced since 1978, the concept of state property,
which originated as a transplanted legal term, has steadily evolved
into a Chinese-style institution serving social goals. 54 On the one
hand, being state property, natural resource rights in China may not
be transferred due to the rule of exclusivity, described as “inalienability entitlement” by Guido Calabresi and A. Douglas Melamed. 55
On the other hand, natural resources such as land, mines, and waters
will be pushed into the marketplace with regard to their allocation,
use, and transfer. Therefore, new types of property rights have to be
created to resolve this paradoxical system. 56 China’s reformers are
trying to steer a middle course between protecting individual rightsholders, who are “entitled to possess, use and seek proceeds from it
in accordance with the law,” and upholding state ownership in accordance with the Constitution. 57
C. The Three Stages of the Transition
Should legislators consider the coastal waters to be immovable
property? This is a controversial issue that has attracted nationwide
attention to the legislative process on property law in China. 58 The
54. Bing Shui, Zi Ran Zi Yuan Guo Jia Suo You Quan Shuang Jie Gou Zao
Shuo [Double-level Structure of State Ownership of Natural Resources], 35 FA
XUE YAN JIU (CHINESE J. L.) 4, 4–18 (2013).
55. Guido Calabresi & A. Douglas Melamed, Property Rules, Liability
Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089
(1972).
56. For example, many private rights embody the right to contracted management of land, the right to use construction land, the right to use house sites, the
right to use seawaters, the mineral prospecting right, the mining right, the water
intake right, and the right to use water areas or tidal flats for farming or fishery,
etc. See Wu quan fa (2007) (P.R.C.), supra note 16, Art. 122–24, 135, 152.
57. Id. at Art. 117.
58. The Standing Comm. Nat’l People’s Congress solicited opinions over
Property Law (Draft) in 2005. The most heated dispute centered on whether and
how to define the right to use the sea area, with 11, 543 pieces of feedback sought
nationwide.
2016]
CHINA
517
logic behind this debate rests in the fact that the physical and economic features of coastal waters have changed at an unprecedented
rate.
When it comes to the characteristic of abundance, coastal waters
are becoming a scarce resource in the course of China’s economic
development. China has an expansive sea area, with a continental
coastline of over 18,000 km, and an island coastline of over 14,000
km. 59 Coastal regions support over 40 percent 60 of the national population and over 60 percent 61 of GDP, while accounting for only 13.5
percent 62 of the total national land area. Legislators and the general
public alike have realized that the nearshore sea area not only supplies important natural resources, but also constitutes a major property category. Therefore, the present demand on coastal resources is
high.
As for the characteristic of fluidity, coastal waters can be partitioned by latitude and longitude using technological means, which
accordingly makes geographical occupation possible. In traditional
civil law, coastal waters are not deemed to be an object to which real
rights can be attached due to their social and economic limitations;
without a recognizable boundary, waters are unlikely to be exclusively accessed. However, with the development of modern technology and devices, a Global Positioning System (GPS) can easily distinguish demarcated sea areas. Furthermore, the term coastal waters
not only refer to mobile and fluid water, but also embraces a threedimensional space consisting of sea surface, seawater, seabed, and
59. Marine Physical Geography, 2013 Zhongguo hai yang tong ji nian jian
35 (2013 Marine Statistical Y. B. China) (Zhonghua Renmin Gongheguo guo jia
hai yang ju [State Oceanic Administration P.R.C.]).
60. Population at Year-end by Region, 2014 Zhongguo tong ji nian jian 28
[2014 Statistical Y. B. China] (Zhonghua Renmin Gongheguo guo jia tong ji ju
[National Bureau of Statistics P.R.C.]).
61. Id. at 221–22.
62. Id. at 211, 234.
518
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
sediment. 63 When viewed from this perspective, coastal areas could
arguably be considered as immovable property.
In terms of publicity, this hardly poses an obstacle for public access because coastal waters belong to the state in China. More specifically, China’s coastal waters are a mixture of state ownership and
private property. State ownership is inalienable, while individuals
can be granted the right to occupy, use, and withdraw specified
coastal waters. This unique system, although imperfect, duly balances the potential conflict of public access and private use in
China’s coastal waters.
From the social point of view, what has occurred in China’s
coastal waters is an under-theorized “trial and error” process, 64
which can be divided into three stages:
The open-access stage (1950–1977)—this refers to the period
when everyone could freely use the natural resources. Under this
commons-like regime, every individual had the opportunity to be a
free rider 65 because they obtained the resources free of charge.
The limited-access stage (1978–2006)—referring to the period
when collective members were granted contractual rights to use
coastal waters and other natural resources by the Family Contract
Farming System (Bao Chan Dao Hu). Under this regime, some collective members were granted contractual rights rather than property
rights (right in rem) to use and withdraw the waters, but they did not
retain the right against the collective and other third parties. Despite
63. According to Art. 2 of Zhonghua Renmin Gongheguo hai yu shi yong
guan li fa [The Law of the People’s Republic of China on the Administration of
the Use of Sea Areas] (promulgated by the Standing Comm. Nat’l People’s Cong.,
Oct. 27, 2001, effective Jan. 1, 2002) 2002 Standing Comm. Nat’l People’s Cong.
Gaz. (P.R.C.), “sea area refers to internal waters, water surface, water body, seabed and sediment of territorial waters in the territory of the People’s Republic of
China.”
64. For a brief introduction to this process, see Frank Xianfeng Huang, The
Path to Clarify: Development of Property Rights in China, 17 COLUM. J. ASIAN
L. 191 (2003).
65. Theodore Groves and John Ledyard, Optimal Allocation of Public
Goods: A Solution to the “Free Rider” Problem, 45 ECONOMETRICA: J. OF THE
ECONOMETRIC SOC. 783, 809 (1977).
2016]
CHINA
519
the lack of stability and transferability, 66 the contractual instruments
acted as a “compromise between formalism and pragmatism” 67 and
succeeded in decreasing the number of free riders in the waters.
The exclusive-access stage (2007–2015)—this describes the period since the application of the Property Law (Wu Quan Fa).
Broadly speaking, the exclusive-access stage could be argued to date
back to 2001 when the Law of the People’s Republic of China on
the Administration of Sea Areas (Hai Yu Guan Li Fa) was introduced
to legally protect “any exclusive continuous use of seas within specific sea areas.” 68 However, this declaration functions only at the
level of administrative law, and the right to use coastal waters was
not treated as a property right until the execution of the Property
Law in 2007. By entitling individuals to exclusively occupy, use,
and withdraw the coastal waters, the Property Law has deprived the
collective or state of the right to terminate the contract at will. In
other words, under this rights-based regime, an individual’s right to
exclusively use the waters was informally framed as a property
right. 69
66. Based on a 1997 study, 66 percent of contracts had been adjusted by the
collective more than once. See Peter Ho, Who Owns China’s Land? Policies,
Property Rights and Deliberate Institutional Ambiguity?, 166 CHINA QUARTERLY
397 (2001).
67. Huang, supra note 64, at 221.
68. According to its definition, “[t]his law shall be applicable to any exclusive continuous use of the seas within specific sea areas of the interior waters or
territorial seas for three months or longer.” See hai yu shi yong guan li fa (2002)
(P.R.C.), supra note 63, Art. 2.
69. According to Art. 120 of Wu quan fa (2007) (P.R.C.), supra note 16, “the
owner shall not interfere with the exercise of rights by the usufructuary” otherwise, according to Art. 37, individuals “may request compensation for the damages and may also request the infringing party to assume other civil liabilities.” In
other words, as a usufruct, the right to exclusively use waters includes the possibility to oppose the state.
520
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
IV. THE EMPIRICAL REALITY OF COASTAL WATERS IN CHINA
A. Does the Property Regime Lead to Anticommons?
As previously noted, I regard the adoption of the Property Law
in 2007 as the starting point for the exclusive-access stage. This is
because the right to use waters, namely the “exclusive continuous
use of seas within specific sea areas,” 70 has been informally treated
as a property right by law. Under the property-right regime, the
coastal waters have been fragmented into numerous small, fencedoff areas that individuals can use exclusively. This change raises two
separate but related questions: Is the property-rights regime more
efficient than ever? And, if yes, will too much fragmentation lead to
underuse in accordance with Heller’s dynamic analytics?
1. The Bottom-Up Model Versus the Top-Down Model
Much has been written, particularly in the literature on law and
economics, about policy instruments for fisheries and waters. Yet
much of the literature has been clouded by the confusion that stems
from the difference between (1) “water right” and “right to use waters,” and (2) “right to aquaculture” and “right to capture.” A water
right entitles the rights-holder to capture and convey water, whereas
the “right to use water” means that the rights-holder can continuously use the specified waters. The term “water right” does not concern fisheries. 71 Yet fisheries revolve around two distinct methods
of production in the economic literature. One is aquaculture, which
requires the persistent occupation of the given waters, and the other,
much more prevalent and older than aquaculture, is capture, which
does not normally require persistent occupation. Further, it can be
hypothesized that strong property rights are necessary for intensive
aquaculture to thrive or, rather, that intensive aquaculture finds it
hard to exist under weak property rights.
70. Hai yu shi yong guan li fa (2002) (P. R. C.), supra note 63, at Art. 2.
71. Here, I disregard the complicated situation whereby rights-holders not
only use the waters to produce seafood, but also to convey the water elsewhere.
2016]
CHINA
521
Clarification of this sort is helpful when studying the way in
which the property-rights regime influences fishery productivity.
When compared with capture production, primarily based on Richard Epstein’s terms, I advocate that aquaculture should be handled
as a bottom-up model because it aims to grant users the right to exclusive occupation. 72 Conversely, I suggest that capture production
should be categorized as a top-down model because it is regulated
by such administrative tools as licensing and permits. To summarize,
it is the bottom-up model which exemplifies the property-rights regime.
For the purposes of comparison, an overview of global fisheries
reveals the imbalance between capture and aquaculture production.
As Figure 2 shows, the level of aquaculture production in China is
far higher than that of capture production, which is quite different
from anywhere else in the world. Even though global aquaculture
production has been on the rise for a long time, it is still nearly equal
to capture production at the global level. A very distinctive picture
emerges in China, where aquaculture production began to increase
in 1978, marking the starting point of the Limited-access stage
(1978‒2006). At the present time, China’s capture production is significantly lagging behind aquaculture production (at around onethird of the level). These facts alone suggest that there is a huge imbalance between aquaculture and capture production.
72. Both the top-down and the bottom-up system are well illustrated by Richard Epstein in his analysis of the allocation of parking spaces on public roads.
Richard A. Epstein, The Allocation of the Commons: Parking on Public Roads,
31 J. LEGAL STUD. 515 (2002).
522
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
Figure 2. Capture Production & Aquaculture Production (1950–
2013) 73
Capture Production
Aquaculture Production
Aquaculture Production
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
China
World
Capture Production
In addition, this imbalance between capture and aquaculture production indicates that the bottom-up model is more efficient than the
top-down model. Figure 3 shows the data on Chinese coastal waters
in more concrete terms. As noted, the top-down model represents
capture production while the bottom-up model represents aquaculture production. Obviously, the curve of the bottom-up model rises
more steeply. All things being equal, we would expect a tendency
for aquaculture output to be far ahead of capture output. It is also
worth pointing out that the year in which bottom-up production exceeded top-down for the first time coincided with the starting point
of the exclusive-access stage (2007–2015).
73. Food and Agriculture Organization of the United Nations [FAO], Fisheries & Aquaculture Department, Statistics, Global Capture Production & Global
Aquaculture Production, https://perma.cc/EB9P-HDRC; https://perma.cc/SC36NVXX.
2016]
CHINA
523
Figure 3. Two Models of Fisheries in Chinese Coastal Waters
1600
Production (tonnes)
1400
1200
1000
800
600
400
200
Top-down model
Bottom-up model
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1985
1980
1978
0
Year
Finally, it is possible to test the null hypothesis by means of
SPSS analysis: that the three access stages will affect the models
equally. I used a one-way, between-group ANOVA (analysis of variance) to analyze the data. Tukey’s post-hoc comparisons were used
to examine the differences between the models (p < .01). Each access stage affected the degree of production that the bottom-up
model would bring about, F (2, 61) = 85.14, p < .01, η2 = .74. The
exclusive-access stage would result in more production (M =
48311416.71, SD = 5843405.88, n = 7) than both the open-access
stage (M = 987709.54, SD = 600227.89) and the limited-access
stage (M = 15965825.52, SD = 12608218.91). 74 Consequently, we
can reject the null hypothesis.
74. To construct and analyze the figure, I used SPSS and reported the findings in accordance with APA style guidelines. See ADELHEID A. M. NICOL &
PENNY M. PEXMAN, DISPLAYING YOUR FINDINGS: A PRACTICAL GUIDE FOR
CREATING FIGURES, POSTERS, AND PRESENTATIONS 12 (6th ed., American Psychological Association 2010).
524
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
As the data are statistically significant, we can conclude that the
bottom-up model is more efficient than its counterpart model within
Chinese coastal waters.
2. Data and Findings
The Chinese example also casts an interesting light on the question of whether the fragmented rights would lead to a tragedy of the
anticommons. According to recent data, a total of 6,499,882.37 hectares of sea area have been allocated for exclusive use. The certificates of rights to use coastal waters amount to 191,524 and every
certificate signifies an exclusive section of coastal waters. Mathematically, this indicates that the mean area of exclusive use is 33.93
hectares per certificate. I refer to this as the fragmentation index (FI)
of coastal waters. In 2012, the total area reserved for aquaculture
amounted to 2,180,927 hectares, which yielded a production total of
16,438,105 tons. Therefore, the mean output of aquaculture was
7.537 tons per hectare. I refer to this as the production index (PI) to
formalize the discussion.
I collected fragmentation index and production index data from
all eleven coastal provinces in China. The data was derived primarily from three sources: (1) the China Ocean Yearbook; 75 (2) the
China Marine Statistical Yearbook; 76 and（3）the China Statistical
Yearbook. 77 Table 1 lists a breakdown of this information during the
period from 2002 to 2012. I will utilize this dataset to explore the
relationship between fragmentation and production.
75. Zhongguo hai yang nian jian [Ocean Y. B. China] (Zhongguo hai yang
nian jian bian zuan wei yuan hui [Ocean Y. B. China Compilation Comm.]).
76. Zhongguo hai yang tong ji nian jian [Marine Statistical Y. B. China]
(Zhonghua Renmin Gongheguo guo jia hai yang ju [State Oceanic Administration
P.R.C.]).
77. Zhongguo tong ji nian jian [Statistical Y. B. China] (Zhonghua Renmin
Gongheguo guo jia tong ji ju [National Bureau of Statistics P.R.C.]).
2016]
CHINA
525
Table 1. Fragmentation Index (FI) and Production Index (PI) in All Eleven Coastal Provinces in China
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
FI / PI
FI / PI
FI / PI
FI / PI
FI / PI
FI / PI
FI / PI
FI / PI
FI / PI
FI / PI
FI / PI
Shandong
37.4/11.1
33.4/9.4
47.1/8.8
31.5/8.8
30/8.9
31.5/8.7
62.1/8.5
73.4/8.6
58.6/7.9
54/8
160.3/8.3
Jiangsu
289.4/2.4
208.5/2.6
137.5/2.9
173.7/3.1
190/3.4
180.3/4.2
-----
143.7/4.3
173.4/4.1
150.4/4.2
152.5/4.5
Fujian
14.2/20.5
16.1/20.6
9.3/20.3
13.1/20.3
11.8/20.5
13.8/24.9
7.5/23.5
4/21.9
26.9/22
20.7/22.2
27.1/22.9
Hebei
31.6/2.4
33.6/2.9
30.1/3.2
23.8/3.4
17.8/2.7
26.7/3.2
13.7/3.2
41.8/2.7
90/2.5
14.3/2.8
60/2.8
Hainan
12.4/7.9
7/8.9
8.8/9
8/10.5
6.9/11.2
6.1/19
1.1/13.5
2/13
14.6/12.7
16.8/13
25.7/13.6
Shanghai
90.5/3.5
202.8/5.9
----
202.8/7.4
110.3/5.2
555.4/2.7
-----
-----
-----
-----
-----
Liaoning
49.4/6.4
49/4.8
26.1/4.8
36.5/4.7
32/4.6
33/6.3
63.3/4.9
102.7/4.6
168.5/3
215.1/3.2
255.7/3.2
Guangdong
29.2/9.1
21.8/9.1
21.9/9.5
26.2/10
23.3/10.3
23.3/14
176.6/11.8
21.1/12
18.4/12.5
22/13
27.3/13.7
Zhejiang
14.1/7.3
17.9/7.8
49.9/7.9
24.5/7.8
24.4/8.1
30.1/15.2
39.4/8.7
34.3/9
22.2/8.8
54.4/9.3
21.8/9.6
Guangxi
2.7/13
3/13.4
4.8/13.8
3/14.4
2.8/14.5
5.7/16.2
9.2/20.6
14/22.2
10.3/17.1
14.9/17.7
9.4/18.4
Tianjin
48.4/1.4
287.6/1.7
18.2/2
26.3/2.3
27/3
68.8/2
41.3/3.2
65.2/3.3
42.2/3.6
42.9/3.2
21.8/3.6
FI = total entitled areas / number of rights-holders; PI = total production / total entitled areas
What does the data tell us? Regression analysis can help to test the
hypothesis of whether the fragmented waters would lead to the anticommons. If Heller’s hypothesis is assumed to be true, we might
infer that when the scale of fragmentation increases, productivity
will decrease. Or, to put it another way, the more we divide natural
resources into small units, the greater the level of waste and underuse that will occur. To prove this assertion, there should be a positive correlation between the fragmentation index and the production
index.
I analyzed the potential correlation between fragmentation and
production by using Pearson’s r.78 Two variables correlated at r (112)
= .44, p < .001, r² = .193. The fragmentation figure ranged from 1.12 to
555.4 (M = 59.50, SD = 80.67, n = 114). The production figure seen
78.
NICOL & PEXMAN, supra note 74.
526
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
on a regular basis ranged from 1.37 to 24.92 (M = 9.149, SD = 6.20,
n = 114).
Figure 4. Simple Linear Regression of FI and PI 79
As Figure 4 shows, I took production as the dependent variable
and fragmentation as the independent variable. To improve the homogeneity of variance, I used a variance-stabilizing transformation.
Linear regression analysis allowed me to predict PI (production index) from FI (fragmentation index), F (1,112) = 64.42, p < .001,
with a slope of −.37 and a Y-intercept of 3.25. The fragmentation
variable significantly predicted production (p < .001). When predicting production from fragmentation, I erred by 0.59 production rating
points (Standard Error of the Estimate = .59).
Here, potential objections might be raised because I had not
taken into consideration the possibility that other factors could affect
the PI. For example, people might express doubts about whether
lower productivity is caused by the level of economic development
79. All data in the model have been remedied by a variance-stabilizing logarithmic transformation.
2016]
CHINA
527
rather than by the degree of fragmentation. 80 In order to increase the
power of the statistics, I calculated and added the value of per capita
GDP in the eleven coastal provinces because this variable can represent the level of economic development. 81 I then used GDP as a
covariate to conduct an analysis of covariance (ANCOVA). 82 According to the result shown in Table 2, the FI and the PI still tend to
be strongly correlated (p < .001) even when controlling for GDP.
This result further supported my findings.
Table 2. Coefficientsa
Unstandardized Standardized
Coefficients
95.0% Confidence
Coefficients
Interval for B
Std.
Model
B
(Constant)
GDP
FI
Error
3.223
.170
.032
.035
−.394
.052
Beta
t
Sig.
Lower
Upper
Bound
Bound
18.948
.000
2.886
3.560
.076
.903
.369
−.038
.101
−.639
−7.558
.000
−.498
−.291
a. Dependent Variable: PI
Taken as a whole, the statistical data show that the hypothesis is
not true. There is a moderate correlation between fragmentation and
production, but it is negative rather than positive. As a result, we can
reject the hypothesis that high levels of fragmentation would lead to
low production levels. We might then conclude, from an empirical
80. Economists have found that other factors such as geography, climate, and
resource abundance might affect the productivity of natural resources. For instance, a study has shown evidence of a “curse of natural resources”: countries
with great natural resources tend to grow more slowly than resource-poor countries, see Jeffrey D. Sachs & Andrew M. Warner, The Curse of Natural Resources,
31 EURO. ECON. Rev. 827, 827–838 (2001).
81. Robert J. Barro, Economic Growth in a Cross Section of Countries, 425
Q. J. ECON. 407, 433 (1991).
82. Covariate refers to a variable used in ANCOVA to statistically control
for variance, which might be obscuring the effects of an independent variable.
528
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
standpoint, that there is no tragedy of the anticommons in China’s
coastal waters. Conversely, the more fragmented the areas, the
higher the productivity. This, to a large extent, implies that there is
a “comedy of the anticommons” in China’s coastal waters. Therefore, based on the empirical evidence, my conclusion is the opposite
of Heller’s assumed theory.
B. Why a Gridlock Will Not Occur
Why does the anticommons hypothesis fail in practice? As I argued in part II of this article, Heller’s theory incompletely (or imperfectly) interprets the complexity of the real world. At the very
least, he makes no reference to circumstances where state ownership
and private property are always integrated and coordinated as a solution to overcome gridlock. 83 The anticommons hypothesis assumes that too many rights lead to a potential hold-out problem or a
breakdown in cooperation. However, this is not always true; sometimes players choose to cooperate with each other because they are
aware that a non-cooperative strategy is not the best course of action.
By way of illustration, we should consider the actual practice in
China’s coastal waters. Under the current regime, there are three
main players: the state owner (the central government); ownership
agents (the local governments); and private users (individual rightsholders). Theoretically, only the central government can represent
the state to maintain ownership in China. 84 Without the local authority, it is almost impossible for the central government to exercise
state ownership. Aligned with China’s devolution of resources from
83. Although Heller has talked about an array of solutions to cure underuse
in the anticommons, he still assumes a rigid dichotomy between open access and
exclusive access and ignores the cooperative strategy between multi-level users.
As he noted, “commons and anticommons tragedies mirror each other, so solutions for one may inform the other;” HELLER, supra note 5, at 182.
84. According to hai yu shi yong guan li fa (2002) (P.R.C.), supra note 63,
at Art. 3, “[t]he sea areas shall belong to the state, and the State Council shall
exercise ownership over the sea areas on behalf of the state.”
2016]
CHINA
529
central to local authorities, 85 local governments have the legal authority to approve and supervise the use of sea areas. 86 In order to
distinguish them from the central government, which is the unique
representative of ownership, I have designated local governments as
ownership agents.
Along three critical dimensions, all players may enforce cooperative behavior. First, there is a fee-share arrangement between state
owner and ownership agents. According to this system, 70 percent
of the usage fee belongs to ownership agents while 30 percent is
paid to the state owner. 87 Similar to the sharecropping contract between landlord and workers in agricultural history, the fee-share arrangement mitigates the risk of moral hazard, which can be caused
by information asymmetry. 88
Figure 5. Legal Framework for Exercising Rights in China’s
Coastal Waters
85. Contrary to the more centralized reform in Eastern Europe and Russia,
“China has emphasized economic reform through devolution of authority from
the central to local governments.” Yingyi Qian & Barry R. Weingast, Federalism
as a Commitment to Preserving Market Incentives, 11 J. ECON. PERSP. 83, 86
(1997).
86. Apart from large-scale use or “key state construction projects,” most applications to use coastal waters only need to be approved by local governments.
See hai yu shi yong guan li fa (2002) (P.R.C.), supra note 63, Art. 7, 16–18.
87. See Cai Zheng Bu Gu Yu Jia Qiang Hai Yu Shi Yong Jin Guan Li De
Tong Zhi [Notice of Ministry of Financial and State Oceanic Ministry on Collecting the Use Fee in 2007].
88. Joseph E. Stiglitz, Incentives and Risk Sharing in Sharecropping, 41
REV. ECON. STUD. 219, 219–55 (1974); Steven N. S. Cheung, Private Property
Rights and Sharecropping, 76 J. POL. ECON. 1107, 1107–22 (1968).
530
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
Second, there is also a regulatory means to resolve the hold-out
problem, namely the functional-divisions system. This system aims
at “ensuring the sustained utilization of sea areas and promoting the
development of the maritime economy” by planning all coastal waters. 89 In view of the process whereby the functional-divisions system is jointly completed by multi-level governments, to some extent
it avoids the potential hold-out problem. Ideally, by means of a functional-divisions plan, which is treated as implied contractual terms,
the state owner can impose an ex ante regulation as a solution to
keep gridlock at bay. Normally, the hold-out phenomenon occurs
where a large-scale project requires the consent of private users.
However, such large-scale projects should be planned by a functional-divisions system. If this is the case, it implies that private users have accepted the content of the project in advance; if not, the
adjustment of the functional-divisions plan associated with specified
waters is a form of regulatory undertaking. No matter which situation materializes, the hold-out gridlock will not occur.
Finally, the market-driven system forms the basis of a solution
to overcome gridlock. In essence, only when the negotiators believe
that they will benefit from non-cooperative action will the anticommons occur. However, for private rights-holders in China’s coastal
waters, the non-cooperative option is not the best game plan. Most
of them gain exclusive-use rights by bidding or auction. 90 They have
a strong incentive to avoid gridlock because underuse would seriously affect the market value of the waters in the remaining contractual terms. At the very least, refusing the deal means the loss of an
opportunity to make a profit. 91 Therefore, rational individuals are
89. See hai yu shi yong guan li fa (2002) (P.R.C.), supra note 63, at Art. 11.
90. For example, according to the related regulation in Shanghai, “[i]n case
of an application for the use of sea areas for business purposes, the Municipal
Oceanic Bureau shall organize bidding or an auction for the transfer of the right
to use sea areas;” Shang Hai Shi Hai Yu Shi Yong Guan Li Ban Fa [Procedures of
the Shanghai Municipality on the Administration of Use of Sea Areas 2006].
91. In contrast, the risk of gridlock is much higher in land use because the
timeless ownership may weaken the rights-holder’s incentive to make a profit.
However, the right to use waters is not timeless and thus refusing to make a deal
2016]
CHINA
531
willing to accept a good deal as long as the price is right. The same
is true for new users. As such the potential problem of a gridlock is
avoided through negotiations.
V. CONCLUSION
When a Blackacre has to be used by multiple players, there are
two options when it comes to allocating the resource: divide it into
small fenced-off plots (imagine cutting a big birthday cake for party
guests); or permit the players to use the resource simultaneously
(imagine a park crowded with people). If this Blackacre refers to
coastal waters, aquaculture and capture are representative samples
of each allocation.
It is useful, then, to briefly contrast the two models. Borrowing
Epstein’s argument, I designate the former as a bottom-up regime,
and the latter as a top-down one. Consistent with Demsetz’s theory,
the bottom-up regime avoids the tragedy of the commons because it
internalizes potential externalities. But this statement begs the question: if the big birthday cake is cut into so many pieces, will it lead
to waste? Heller’s anticommons hypothesis says yes, but according
to my findings, the answer is no.
As shown by my findings, people are willing to pay for legal
rights which guarantee exclusive access, regardless of the relatively
high cost. The statistical data further reveal that, when coastal waters
are divided, there is a negative correlation between fragmentation
and production. In comparison with Heller’s assumed result, it implies that the more fragmented the waters, the higher the productivity that will occur. On this basis, I might conclude that, from an empirical standpoint, there is no tragedy of the anticommons in China’s
coastal waters.
is a lost opportunity in limited time. An assessment of the difference between land
and waters exceeds the scope of this article, and must be deferred to a subsequent
paper.
532
JOURNAL OF CIVIL LAW STUDIES
[Vol. 9
VI. APPENDIX
A. The value of per capita GDP in all eleven coastal provinces. The
data derive primarily from two sources: (1) China Ocean Yearbook;
(2) China Statistical Yearbook.
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
GDP
GDP
GDP
GDP
GDP
GDP
GDP
GDP
GDP
GDP
GDP
Shandong 11619
13628
16364
20023
23716
27721
32996
35894
41106
47335
51768
Jiangsu
14356
16708
19944
24214
28272
33331
39053
44253
52840
62290
68347
Fujian
13470
14941
16331
18468
21156
25607
29741
33437
40025
47377
52763
Hebei
9091
10487
12451
14737
16694
19746
23163
24581
28668
33969
36584
Hainan
7441
8273
9767
10804
12343
14477
17087
19254
23831
28898
32377
Shanghai
31575
35395
43994
48435
52782
59055
63980
69164
76074
82560
85373
Liaoning
12528
14258
15822
18974
21574
25648
31197
35149
42355
50760
56649
Guangdon 13273
15202
20705
24327
27705
32178
36082
39436
44736
50807
54095
Zhejiang
16323
19343
23652
26924
31038
36431
41226
43842
51711
59249
63374
Guangxi
5092
5631
7023
8746
10232
12491
14891
16045
20219
25326
27952
Tianjin
20369
24210
30380
35452
40412
45295
54034
62574
72994
85213
93173
2016]
CHINA
533
B. The picture on the left shows the ichnography of sea areas in
Lingshui Harbor, Hainan province. As this ichnography reveals, a
Global Positioning System (GPS) can distinguish and locate the sectioned-off sea areas, and the inherent fluidity will not prevent coastal
waters from being turned into property. The picture on the right
shows aquaculture production in Wenchang County, Hainan province.